CARB Proposes LCFS Verification Program

Ethanol producers need to watch developments in the California Low Carbon Fuel Standard as the rules are updated. This Business Matters column appears in the April print issue of Ethanol Producer Magazine.

By John Sens | March 22, 2017

California’s Low Carbon Fuel Standard aims to reduce greenhouse gas (GHG) emissions from transportation fuels by 10 percent by 2020. The LCFS is implemented by the California Air Resources Board under AB 32. In September, AB 32 was extended with a total GHG reduction target of 40 percent by 2030. The LCFS program targets for 2030 have yet to be determined, although three have been proposed: 10, 18 or 25 percent GHG reduction below 1990 levels.

Ethanol producers can participate in the California LCFS program, if they complete a pathway application using the CA GREET2.0 model for a Tier 1 or Tier 2 pathway. Selling into California allows ethanol producers to get both state and federal credits for biofuel sold in the state, which has spurred biofuels growth in and outside of California.

CARB is creating a mandatory verification program to stabilize the LCFS that will go into effect in 2019 and holding a series of workshops and discussions this year to inform the public and solicit stakeholder feedback. The first public working meeting focused on ethanol was held Jan. 31. CARB staff discussed key changes to the mandatory verification program in development and the LCFS program. Meeting documents and the future meeting schedule can be found by searching for LCFS meetings at www.arb.ca.gov.

The mandatory verification program would validate the initial 24-month period of operations data needed when applying for a fuel pathway code (FPC) and would verify the average carbon intensity (CI) over a year’s compliance period for a facility to ensure it does not exceed the certified pathway CI value. The program would verify total ethanol production and volumes of ethanol sold using a mass balance and energy assessment and verify volumes claimed as imported or produced in California to ensure proper and accurate reporting. The program would also verify volumes exported out of California.

Companies that participate in the verification program will need to confirm their initial CI score, review their operations and general characteristics of the facility. Ongoing third-party verification will be a central piece of the program. The required operational data and supporting records include:

As part of the ongoing verification, third-party verifiers will review pertinent documentation, including product transfer documents, contracts, invoices and other documents that are related to the business activities around fuel sales. A number of program implementation details remain to be worked out. These include identifying which entities in the supply chain will be required to participate in a verification program, site visit frequencies and the verification time period and scope.

Several other regulatory amendments are proposed. One would replace the current Tier 1 pathway application form with a simplified Excel form that contains key parameters of ethanol production, including starting inventory, ending inventory, purchases and sales, and the calculated production or input of materials at the facility. Another would allow the allocation of quarterly fuel volumes to the feedstock types used in production.

Separate distillers grains coproduct pathways are proposed, which would allow ethanol producers to account for different types of DGS produced, rather than using a composite pathway with the average make-up of DGS produced. Verification would include determining the split of energy use for the different types of DGS produced—the primary purpose of this change.

Also under consideration is the use of automatic holds for transactions that have not yet been reconciled in the LCFS reporting tool (LRT) among all applicable parties.

It is important for LCFS program participants to watch developments in the LCFS program and prepare to meet the mandatory verification program requirements at their facilities. An important step in preparing for the coming verification program will be that key elements of plant operations are being documented clearly through metering, tracking and accounting systems and that they can be easily audited.